Due to irrational use of natural resources largely driven by overconsumption, ecosystems are fast losing their regulating and supporting functions, including water regulation and purification, climate and disease regulation, soil formation and nutrient cycling. As natural habitats shrink, ecosystem services previously enjoyed for free are becoming increasingly threatened. This context has led to the idea of using market-based instruments to address environmental problems such as climate change, deforestation, watershed degradation, and biodiversity loss.
Payment for ecosystem services (PES) is one example of a market-based instrument, wherein people who benefit from ecosystem services provide economic incentives for local landholders and users in return for adopting practices that secure ecosystem conservation and restoration.
PES is being promoted as a way to efficiently rationalize the use of natural resources to achieve environmental outcomes. PES uses price signals, trading schemes and auctions as a means to influence people’s behavior. Ecosystem Marketplace issues annual reports on trading schemes for carbon, water and biodiversity. An incentive mechanism for forested countries to reduce emissions from deforestation and forest degradation (REDD+) is being negotiated through the UN Framework Convention on Climate Change. REDD+ is seen as a way to keep natural forests standing when market pressures to cut and convert to other land uses are high.
The idea of paying for something that used to be enjoyed for free of course raises questions. Some question the ethics of ‘commoditizing’ nature. Some ask who will shoulder the payments. Others inquire about methods to prove that what is paid for is being delivered. Many are concerned about who will benefit from the payments and how these payments will be distributed.
With increasing platforms for dialogue, questions are gradually being answered. People are now more conscious about having reached the physical limits of our planet, and more are now willing to pay for ecosystem services. Advocacy is growing for free, prior and informed consent or FPIC, a way to respect the desires of some cultures that prefer not to engage. The argument that market efficiencies rather than social objectives should drive the design of PES schemes has already been refuted.
More policy makers are now convinced that addressing questions of distribution and equity is not a distraction from the efficiency goals of PES but a prerequisite. PES is increasingly acknowledged as a tool to recognize the contribution to society and the economy of people in the rural uplands as protectors of ecosystem services. As a result, consensus is growing that PES is not unethical per se. However, a lot has to be done to make it work effectively, efficiently and equitably.
Ultimately, PES is about setting up a process of ecological engagement to transform behaviors, institutions, and technologies. PES can change people’s behavior towards addressing environmental problems if:
People trust the payment scheme. Legitimacy and credibility to both ‘buyers’ and ‘sellers’ of ecosystem services are important.
- Tenure and access rights and duties are clear, to determine who will get paid and for what they are receiving payments. As the Task Force on Ecology notes, tenure reform can create the self-interest that leads to an improved natural resource base. This is very important in Asia, where most forestlands are government-owned and people living in or near forests have limited land and resource rights.
- Benefits are equitably shared among ecosystem service providers. Transparency and constant communication are also important to deflect envy and jealousy, and to avoid crowding out altruistic behavior and duty of care inherent in many indigenous cultures.
- The scheme promotes collaboration and increases social capital. These are necessary to achieve landscape level outcomes.
- ‘Buyers’ have a way of knowing how and when ecosystem services are being delivered, through monitoring, reporting, and verification.
When PES allows poor households to reap the benefits of good stewardship of their ecosystem, the potential is greater for PES to help them gain the economic, social, and environmental resilience needed to cushion the impacts of climate change. PES can help promote values that can play a decisive role in establishing new relationships with creation, if the promotion of equity and justice become part of the core principles driving its design.
Rowena Soriaga is a staff of Environmental Science for Social Change, a Jesuit research organization in the Philippines. Rowena is currently seconded to an Asian Development Bank regional research project on Capturing Economic Benefits from Ecosystem Services documenting lessons from seven countries where PES schemes are implemented. Rowena is also involved with the Asia Forest Network to promote the role of local communities in the sustainable management and restoration of Asia’s forests.